On 13 March 2017, The Guardian issued proceedings against Rubicon, an adtech company that had been providing a programmatic ad platform to act as an agent and sell The Guardian’s ad space online. Rubicon sold that ad inventory to advertisers and The Guardian alleges that Rubicon retained “substantial sums” from those buyers in addition to the fixed-percentage fees that had been agreed between the parties. These “secret profits” were allegedly hidden in the monthly reports provided by Rubicon to The Guardian and, as such, The Guardian is concerned with two main visibility issues:

Rubicon did not inform the buyers how much of what they paid would be retained by Rubicon itself and not The Guardian; and

As a result of this practice, The Guardian says it had no understanding as to how much buyers were willing to pay for its media.

This activity apparently took place between 2010 and 2016, with Rubicon allegedly siphoning an estimated £1.2 million from programmatic advertising sales across the Guardian’s website.

Under the publisher agreement that the parties had entered into, the Guardian claims that Rubicon (which was acting as an agent for the Guardian) owed fiduciary duties to (i) act in good faith, (ii) optimise the revenue generated for The Guardian and (iii) to account for and pay to The Guardian all money received from purchasers. In addition to this, Rubicon also owed the Guardian a duty to avoid any situation of direct or indirect interest that could conflict with its duty to the Guardian and not to make any profit from its position without the Guardian’s knowledge and consent.

As well as claiming breach of fiduciary duty, The Guardian is also suing Rubicon for breach of contract, deceit and misrepresentation with regards to Rubicon’s accounting of money received from purchasers of advertising and the amount of money that Rubicon retained from these purchasers.

As a result of the alleged activity by Rubicon, The Guardian is looking to recover various amounts, including an account of the “secret profits” received and compensation.

In Rubicon’s defence, which was filed in May 2017, Rubicon denies liability and claims that the Guardian was fully aware of what was occurring.

Why this matters:

There have been increasing calls for transparency in the programmatic ad buying industry in the UK, but this is the first time we’ve seen the issue taken publicly to litigation.

Rubicon have counterclaimed against The Guardian, and it will be very interesting to see if this case settles or proceeds all the way to final judgment.

Either way, there is no doubt that financial transparency issues are in the spot-light – and this case shows that this risk of litigation is one that cannot be discounted.